In an ironic lexical revenge, China has set upon its enemies with accusations of arrogance. Long denounced for its economic and cultural nationalism, now it is Beijing who is calling out American technology company Apple. Via state-controlled media, Beijing has alternately called Apple “greedy,” “dishonest,” and “incomparably arrogant.” Apple CEO Tim Cook made a formal apology yesterday, demonstrating that China’s hardball – independent of veracity of the accusations – has produced satisfying results. The antagonism has unravelled in a meticulous crescendo, so perfectly orchestrated that it is unlikely to have been spontaneous. It all began with a seemingly futile commercial complaint – a consumer report on state run television channel CCTV about the inability to find a suitable protective cover for an iPhone. A flood of posts on China’s Weibo service, similar to Twitter, included comments by local celebrities that fanned the flames. Most importantly, the press continued its assault on Cupertino, led by an editorial in the People’s Daily, the mouthpiece of the CCP. The consumer complaints against Apple’s after-sales service certainly did not justify such an intense media backlash. Many micro-bloggers turned the other way and began to ask themselves why state media was so obsessed with Apple’s consumer care, rather than worrying about the yellow drinking water, 10,000 dead pigs in Shanghai’s Huangpu river, Beijing’s intolerable pollution, or infant deaths from spoiled powdered milk. In any case, sales of Apple products in China are proceeding at full steam. Growth rates over the last three years have been astronomical, increasing by a yearly average of 230%. It is likely that sales in China, now in second place, will top the US by 2016. This is probably why Apple hesitated only a couple of days before begging forgiveness for its after-sales service and the lack of effective communication that “led to perception Apple’s attitude was arrogant.” China is a strategic market for the Cupertino company. Investigating the origins of this seemingly inexplicable dispute reveals a host of plausible theories with varying degrees of probability. One possibility could be Beijing’s newfound rigidness towards multinational corporations. The long and controversial honeymoon has borne the desired results: corporations have grown richer, and China has become more modern. Now it is China, who’s bargaining position has become much stronger, that puts the model into question. The country now needs a more sophisticated manufacturing machine, and it cannot count on foreign injections any more. In this case the message would be subliminal but clear: China will make any effort to gain the technology it lacks. It could be payback for the obstacles faced by Chinese companies – especially IT giants like Huawei – when trying to operate in the US. It is also possible that the new leadership is flexing its muscles at the outset of its mandate, just as tensions with surrounding countries reach a peak not seen in decades. Nevertheless, China’s attempts to catch up with Western industry are the most likely explanation for the Apple dispute, primarily in development of operating systems to match sophisticated hardware. Android is the undisputed dominant mobile OS in China, thanks to its quality and most importantly to its defiance of imitation. It is predicted that 300 million Chinese smartphones will be running Android by the end of 2013, 76 million more than in 2012. A report was released by a think tank at China’s Ministry of Industry and Information Technology (MIIT) just two weeks before China let loose on Google. The conclusions? Google and Android are too powerful; China should stop being so dependent and start to develop its domestic software industry. Bringing back memories of China’s historical fights with Google, it is easy to see that IT companies are being automatically targeted when they start to grow too big. Apple, Google, and Android appear to be essential for China for the very reason that their qualities are unattainable. They are also uncontrollable and their secrets remain just that, secrets. Faced with uncertainty and impotence, even an unprovoked media attack finds justification. Apple’s apology seems to place China in the right, but we will soon find out if the country is able to break free of its dependence on Silicon Valley or if this latest battle was just a Pyrrhic victory.

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About Alberto

Alberto Forchielli, born in 1955, received an MBA with honors from Harvard Business School and a bachelor’s cum laude in Economics from the University of Bologna. He is a founding partner of Mandarin Capital Partners, and the founder and president of Osservatorio Asia, a non-profit research center focused on Asia. He is also the founder of T-Island, a consultancy agency specialized in international relocations for professionals. In addition, he guided the expansion of the Roland Berger Foundation to Italy, which provides individual support for talented students lacking means to further their educations.